General information

Record keeping requirements

Generally, a superannuation fund must keep all relevant records for 5 years after they were prepared or obtained, or five years after the completion of the transactions or acts to which they relate, whichever is the later. However, this period may be extended in certain circumstances.

Keep records in writing and in English. You can keep them electronically, as long as the records are in a form that we can access and understand to ascertain the fund’s tax liability.

For more information, see

• TR 96/7 Income tax: record keeping – section 262A – general principles
• TR 2018/2 Income tax: record keeping and access – electronic records

You are not expected to duplicate records. If the records that the superannuation fund normally keeps contain the information specified in the instructions, you do not need to prepare additional records.

For some items on the tax return, these instructions spell out specific record-keeping requirements. In general, these records cover instances where the necessary information may not be available in the normal fund accounts.

The record-keeping requirements within the instructions indicate the information that the superannuation fund uses to calculate the correct amounts to declare on its tax return. However, this information is not an exhaustive list of the records that a superannuation fund needs to maintain.

Prepare and keep these documents:

• a statement of financial position
• a detailed operating statement
• a statement of cash flow (reporting entities only)
• notices and elections
• documents containing particulars of any estimate, determination or calculation made while preparing the tax return, together with details of the basis and method used in arriving at the amounts on the tax return
• a statement describing and listing the accounting systems and records, for example, a chart of accounts showing those that are kept manually and those that are kept electronically
• copies of all tax returns lodged.

The law imposes a penalty where a superannuation fund fails to keep records in the required manner, or it fails to retain records for the appropriate period.

Assessment

An assessment of a superannuation fund, ADF or PST is deemed to be made on the day on which the tax return is lodged.

Objection to assessment

If a trustee is dissatisfied with an assessment, the trustee may object against that assessment, generally within four years of the deemed assessment date. However, a trustee’s right to object to an assessment ascertaining that there is no taxable income or no tax to pay on the taxable income is limited. The objection must be made in the approved form, lodged with the Commissioner in the prescribed period and state within it, fully and in detail the grounds that the trustee relies on.

For more information on objections against income tax assessments: see Taxation Ruling TR 2011/5 Income tax: objections against income tax assessments.

Private rulings by the Commissioner of Taxation

A private ruling is a written expression of opinion by the Commissioner about the way in which tax laws and other specified laws administered by the Commissioner would apply to, or be administered in relation to, an entity in relation to a specified scheme.

An application for a private ruling must be made in the approved form and in accordance with Divisions 357 and 359 of Schedule 1 of the TAA 1953.

The required information and documentation that accompany a private ruling request must be sufficient for the Commissioner to make the private ruling and include:

• the entity to whom the ruling is to apply
• the facts describing the relevant scheme or circumstance
• relevant supporting documents, such as transaction documents
• issues and questions raised that relate to the relevant provision to which the ruling relates
• your argument and references on these questions.

The Commissioner may request additional information to make a ruling. The Commissioner will then consider the request and either issue or, in certain limited circumstances, refuse to issue a private ruling.

The trustee may apply for a ruling affecting a member’s income tax affairs with the written consent of the member.

Publication of private rulings

To improve the integrity of the private rulings system, we publish a version of every private ruling on the ATO Legal database.

Before we publish, we edit the ruling to remove all identifying details to ensure that taxpayer privacy is maintained.

A copy of the edited version of the ruling that we plan to publish is included with the ruling. Applicants who are concerned that the edited version may still allow them to be identified have 28 days to contact us to discuss these concerns.

For more information, see PS LA 2008/4 Publication of edited versions of written binding advice.

Review rights for private rulings

Trustees can object to private rulings, or a failure to make a private ruling in much the same way as they can object to assessments. They also can seek a review of adverse objection decisions on a private ruling by the Administrative Appeals Tribunal (AAT) or a court. An explanation of review rights and how to exercise them is issued with the private ruling. An objection to a ruling can be lodged within the later of:

• 60 days after the ruling was made
• Four years from the last day allowed for lodging a Fund tax return for the income year covered by the ruling.

A trustee cannot object to a private ruling if an assessment has occurred for an income year or other accounting period to which the ruling relates, however they can object to the assessment.

If a trustee has objected to a private ruling, they cannot object on the same grounds against a later assessment, unless the facts have changed.

When rulings are binding

A private ruling is binding on the Commissioner where it applies to an entity and the entity has relied on the ruling by acting (or omitting to act) in accordance with the private ruling. An entity can stop relying on a private ruling at any time by acting (or omitting to act) in a way that is not in accordance with the private ruling and can subsequently resume relying on the private ruling by acting accordingly. This is unless the entity is prevented in either case from doing so by a time limit imposed by a tax law.

The Commissioner cannot withdraw a private ruling. However, the Commissioner can make a revised private ruling if the scheme to which the earlier private ruling relates has not begun to be carried out and, if the earlier private ruling relates to an income year or other accounting period, that year or period has not begun.

Payment plans

Paying your tax debt

Income tax debts must be paid by the due date; see Payment.

General interest charge (GIC) is an interest charge imposed where there is a late payment of a tax debt. The GIC rate is based on the 90-day bank accepted bill rate plus 7% and is updated on a quarterly basis. Amounts payable under the original assessment are due on the statutory due date for payment, which is the first day of the sixth month of the following income year or by such later date as the Commissioner allows. For example, for large and medium funds with a balancing date of 30 June 2021, the statutory due date for payment is 1 December 2021. GIC will begin to accrue from the due date for payment until the amount is paid in full.

For more information about the GIC, phone 13 28 66.

What if the fund cannot pay the tax debt by the due date?

You are expected to organise the Fund's affairs to ensure that debts are paid on time. However, if the fund cannot pay the debt on time, you may be able to set up a payment plan to pay by instalments. You need to consider how much you can pay so you can meet each ongoing payment amount and future obligations.

If you are trying to do the right thing, we're committed to understanding your situation and helping you where possible. We may need to know more about the fund's financial position, including a statement of its assets and liabilities, income and expenditure. We may also need to know what steps the fund has taken to obtain funds to pay its tax debt, and the steps it is taking to meet future tax debts on time.

Even if you enter into a payment plan to pay late or by instalments, interest may continue to accrue on the unpaid debt.

To set up a payment plan:

• If your debt is $100,000 or less, the easiest way is to log into your account at ATO Online, or phone 13 11 42 during operating hours.
• If your debt is greater than $100,000 phone 13 11 42 during operating hours.
• You can also contact your tax agent for assistance.

Election to become a regulated fund

A trustee must elect for the fund to become ‘regulated’ under the SISA if the fund wishes to receive concessional tax treatment. The trustees of a new fund must, within 60 days after establishment of the fund, give APRA a notice of an election to be a regulated superannuation fund.

The trustee completes an application for ABN registration for superannuation entities. You can register at abr.gov.auExternal Link or you can phone 13 10 20 and ask for a paper copy of the application.

Once a trustee has elected for the fund to become regulated, they cannot reverse the decision; the fund would have to be wound up to cease to be regulated under the SISA and the Superannuation Industry (Supervision) Regulations 1994External Link (SISR).

Switching regulators or changing trustees

Do not use either the Fund income tax return 2021 or the Self-managed superannuation fund annual return 2021 to report a switch of regulator or changes of trustees. If a non-regulated or Australian Prudential Regulation Authority (APRA) regulated superannuation fund attempts to lodge a Self-managed superannuation fund annual return 2021 it will be rejected. The same will occur if an SMSF attempts to lodge a Fund income tax return 2021.

Capital gains tax record keeping

A superannuation fund must keep records of everything that affects its capital gains and capital losses for at least five years after the relevant CGT event.

If a superannuation fund carries forward a net capital loss, the fund should generally keep records of the CGT event that results in the loss for five years from the year in which the loss was made, or four years from the date of assessment for the income year in which the capital loss is fully applied against capital gains, whichever is longer.

For more information on record keeping for capital gains tax, see:

• Guide to capital gains tax 2021
• Taxation Determination TD 2007/2 – Income Tax: should a taxpayer who has incurred a tax loss or made a net capital loss for an income year retain records relevant to the ascertainment of that loss only for the record retention period prescribed under the income tax law?

Tax losses record keeping

If a superannuation fund incurs tax losses, it may need to keep records longer than five years from the date when the losses were incurred.

Generally, tax losses incurred in an income year can be carried forward indefinitely until they are applied by being deducted. When applied, the loss amount is a figure that is included in the calculation of the superannuation fund’s taxable income in that year.

It is in the superannuation fund’s interest to keep records substantiating this year’s losses until the amendment period for the assessment in which the losses are applied has lapsed (in most cases up to four years from the date of that assessment); see TD 2007/2.

Record keeping for overseas transactions and interests

Keep records of any overseas transactions in which the superannuation fund is involved, or has an interest, during the income year.

The involvement can be direct or indirect, for example, through persons, trusts, companies or other entities. The interest can be vested or contingent, and includes a case where the fund has direct or indirect control of:

• any income from sources outside Australia
• any property (including money) situated outside Australia; if this is the case, keep a record of:    
  • the location and nature of the property
  • the name and address of any partnership, trust, business, company or other entity in which the superannuation fund has an interest
  • the nature of the interest.

If an overseas interest was created by exercising any power of appointment, or if the superannuation fund had an ability to control or achieve control of overseas income or property, keep a record of the following:

• the location and nature of the property or income
• the name and address of any partnership, trust, business, company, or other entity in which the fund has an interest.

Taxation of financial arrangements (TOFA)

The key provisions of the TOFA rules are found in Division 230 of the ITAA 1997, which generally provides for:

• methods of taking into account gains and losses from financial arrangements, being accruals, realisation, fair value, foreign exchange retranslation, hedging, reliance on financial reports and balancing adjustment
• the time at which the gains and losses from financial arrangements will be brought to account.

Which funds are affected?

The TOFA rules apply to a fund where the value of the fund's assets is $100 million or more. For the purposes of this test, the value of the fund's assets is worked out at the end of the immediately preceding income year (being the fund's income year ending 30 June 2010 or a later income year). If the fund came into existence during the current income year, the value of the fund's assets is worked out at the end of this income year.

Once the TOFA rules apply to a fund, they will continue to apply to that fund, even if its value of assets later falls below $100 million.

A fund that does not meet these requirements can elect to have the TOFA rules apply to it.

Which financial arrangements will the TOFA rules apply to?

The TOFA rules apply to all financial arrangements that the affected fund starts to have during income years commencing on or after 1 July 2010. In addition, a fund may have elected to have the TOFA rules apply to its financial arrangements for income years commencing on or after 1 July 2009.

A fund may have also separately made a transitional election to apply the TOFA rules to their existing financial arrangements.

Foreign exchange (forex) gains and losses

Under the forex measures (Division 775 of the ITAA 1997) and the general translation and functional currency rules (Subdivisions 960-C and 960-D of the ITAA 1997), forex gains and losses are generally brought to account as assessable income or allowable deductions, when realised. The forex measures cover both foreign currency denominated arrangements and, broadly, arrangements to be cash-settled in Australian currency with reference to a currency exchange rate. Forex gains and losses of a private or domestic nature, or in relation to exempt income or non-assessable non-exempt income, are not brought to account under the forex measures.

If a forex gain or loss is brought to account under the forex provisions and under another provision of the tax law (apart from the TOFA rules), it is assessable or deductible only under the forex measures.

Generally, where the TOFA rules apply to the forex gains and losses of a fund, then those gains and losses will be brought to account under the TOFA rules instead of the forex measures.

Additionally, forex gains and losses will generally not be assessable or deductible under the forex measures if they arise from certain acquisitions or disposals of capital assets, including CGT assets and depreciating assets, and the time between the acquisition or disposal and the due date for payment is no more than 12 months. Instead, any forex gain or loss is usually matched with or integrated into the tax treatment of the underlying asset.

The general translation rule requires all tax relevant amounts to be expressed in Australian currency regardless of whether there is an actual conversion of that foreign currency into Australian dollars.

The tax consequences of forex gains or losses on foreign currency assets, rights and obligations that were acquired or assumed before 1 July 2003 are determined under the law as it was before these measures came into effect, unless:

• the fund has made a transitional election that brings these gains and losses within the forex measures, or
• there is an extension of an existing loan (for example, an extension by new contract or a variation to an existing contract) that brings the arrangement within these measures.

For more information, see Foreign exchange gains and losses.

General value shifting regime

The general value shifting regime (GVSR) (Divisions 723 to 727 of the ITAA 1997) can apply to value shifts that happen from 1 July 2002.

Broadly, value shifting describes transactions and other arrangements that reduce the value of an asset and (usually) increase the value of another asset.

The GVSR consists of direct value shifting (DVS) and indirect value shifting (IVS) rules that primarily affect equity and loan interests in companies and trusts. There is also a DVS rule dealing with non-depreciating assets over which a right has been created. There are different consequences for particular interests according to whether the interest is held on capital account, as a revenue asset, or as trading stock.

Where the rules apply to a value shift, there may be a deemed gain (but not a loss) adjustment to adjustable values (such as cost bases) or adjustments to losses or gains on the realisation of assets.

There are ‘de minimus’ exceptions and exclusions which will minimise the cost of complying with the GVSR, particularly for small businesses. Entities dealing at arm’s length or on market value terms are generally excluded from the GVSR.

For more information, see Guide to the general value shifting regime.

Debt and equity rules

The debt and equity rules (Division 974 of the ITAA 1997) broadly operate to characterise certain interests as either debt or equity. For some tax law purposes, equity interests are treated in the same way as shares, even though they are not shares in legal form. These interests are called ‘non-share equity interests’. They include some income securities and some stapled securities.

For an overview of the debt and equity rules and an explanation of what constitutes a non-share equity interest, see Guide to the debt and equity tests.

For the purposes of the imputation system, generally non-share equity interests are treated in the same way as shares that are not debt interests. Non-share dividends on these types of interests may be franked or unfranked. Show any amount of non-share dividend, whether franked or unfranked, or any amount of franking credit attached to the non-share dividend at the appropriate place on the tax return as if it were for a share.

Trans-Tasman imputation

The Trans-Tasman imputation provisions (Division 220 of the ITAA 1997) allow New Zealand resident companies to choose to enter the Australian imputation system. Doing so allows a company to maintain an Australian franking account and to attach Australian franking credits to dividends it pays one month after the company makes an election. Australian shareholders of these companies may benefit from the Australian franking credits attached to distributions the companies make (such a company is referred to as a New Zealand franking company).

If the fund is an Australian shareholder of a New Zealand franking company and received franked dividends with Australian franking credits attached directly or indirectly from a New Zealand franking company, see the following instructions for help in completing the tax return:

• D1 Gross foreign income item 10
• E Australian franking credits from a New Zealand company item 10.

For more information, see Trans-Tasman imputation for New Zealand companies.

Foreign resident withholding

Subdivision 12-FB of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953) contains a withholding event for payments made to foreign residents. Only payments prescribed in the Taxation Administration Regulations 2017 (and former Taxation Administration Regulations 1976) are subject to this withholding measure. Withholding applies to certain payments made to foreign residents for operating or promoting gaming junkets in one or more casinos; entertainment or sports activities; the construction, installation and upgrading of buildings, plant and fixtures and activities associated with such construction.

Payers are required to withhold at the relevant rate prescribed in the appropriate regulation. We may grant a variation to the rate of withholding in special circumstances.

• Foreign resident withholding does not affect other PAYG and non-resident withholding obligations on interest, dividend and royalty payments.
• This withholding is not a final tax. These withholding requirements will not affect existing income tax obligations for foreign residents deriving assessable income in Australia, such as the requirement to lodge a tax return. Any amounts withheld may be available as a credit against the income tax assessed.

Gross income subject to foreign resident withholding will not be taken into account in determining the fund’s instalment income.

For more information:

• see Foreign resident withholding (FRW) – who it affects, or
• phone 13 28 66.

Foreign currency translation rules

If the fund has entered into transactions in a foreign currency or derived income in a foreign currency, those amounts will need to be translated to Australian currency to calculate the amount assessable or deductible. The foreign currency translation rules are contained in Subdivision 960-C of the ITAA 1997 (and the functional currency rules are contained in Subdivision 960-D of the ITAA 1997).

For more information about the foreign currency translation rules, see:

• Translation (conversion) rules (NAT 9339)
• General information on average rates (NAT 13434).

Self-determination of foreign income tax offset

If a superannuation fund has paid foreign tax and wants to claim a foreign income tax offset, calculate the amount of any such offset allowed and show it at C1 Foreign income tax offset item 12 in Section D: Income tax calculation statement.

For more information on the calculation of foreign income tax offset, see the Guide to foreign income tax offset rules 2021.

For help with the calculation, or advice about whether the offset is allowed, phone 13 28 61.

Treatment of cryptocurrencies

If you are involved in acquiring or disposing of cryptocurrency, you need to be aware of the tax consequences. These vary depending on the nature of your circumstances.

For information on any of the activities below, see Tax treatment of cryptocurrencies.

• Cryptocurrency as an investment
• Using cryptocurrencies for business transactions
• Exchanging a cryptocurrency for another cryptocurrency
• Capital gains tax impacts on disposal